How Kmart Went From Beating Walmart And Target To Bankruptcy


Say you need a toaster. And you have to go buy it in a physical store. Where would you go? Walmart? Target? Perhaps Williams-Sonoma if you’re feeling fancy? What about Kmart? No? Kmart might not have occurred to you, and that makes sense. You might not even be able to find a Kmart near you. The struggling retailer has closed over two-thirds of its stores in just the last 10 years. You would almost certainly have to buy your toaster elsewhere. But if this were the 1970s, Kmart would probably be your first choice. Kmart’s origins date back to 1899, when American businessman Sebastian Spering Kresge opened S.S. Kresge, a store that sold a variety of homegoods at a discount. By 1912, S.S. Kresge had 85 stores and annual sales topping ten million dollars. It went public in 1918 and Kresge stepped down as president in 1925. But the store remained popular as Americans battled through the Great Depression and two world wars. Then, in 1962, the company’s president, Harry Cunningham, capitalized on S.S. Kresge’s popularity by opening another variety store: Kmart. The first Kmart opened in Garden City, Michigan. 17 more followed in the same year. Four years later, when Sebastian Kresge died at age 99, Kmart had expanded to 162 locations. The combined Kmart-Kresge sales topped one billion dollars. Kmart quickly overtook S.S. Kresge. In 1976 alone, Kmart opened 271 locations and accounted for nearly 95% of the S.S. Kresge company sales. So the company renamed itself Kmart Corporation. In the 70s, they were adding a new store a week, which is just an incredible pace to maintain. There were a lot of brands in the discount market that Kmart forced out of business. They were the success story. Kmart had a few major strengths. First, it struck exclusive deals with popular brands like Martha Stewart Living and Disney kids apparel. Second, it had the size to buy in bulk and resell at steep discounts. And Kmart made the discounts an exciting shopping experience with their Blue Light Specials, where managers would spontaneously announce sales with flashing blue police sirens and a booming “attention Kmart shoppers.” And finally, Kmart expanded rapidly. By 1995, Kmart’s 2,000 stores made $34 billion in sales. Over 95 % of Americans lived within a 15-mile radius of a Kmart. The company bought several other retailers like Sports Authority and OfficeMax, making it the 15th largest corporation in the world. So that toaster you needed? Yeah, you probably would have bought it at a Kmart. But then, seven years later, Kmart filed for bankruptcy. It was the largest retailer in the U.S. to ever do so. It seemed Kmart was, well, toast. To learn why, let’s rewind back to 1962, the year Kmart opened its doors. Two other discount variety stores also opened that year. They challenged Kmart with cheap chic fashion and rock bottom prices. You know them well: Target and Walmart. While Kmart spread rapidly across the suburbs Walmart and Target took different approaches. Walmart focused on rural America, pushing mom-and-pop stores out of business with its prices. It built efficient supply chains to keep prices low and product moving quickly. This tactic worked. By 1990, Walmart surpassed Kmart in sales despite having 600 fewer stores. Meanwhile, Target spread more slowly. It focused on offering department store quality and service at an affordable price, embodied in its slogan “Expect More, Pay Less,” and its nickname Targèt. This tactic also worked. By 1993, it only had 554 stores, yet produced nearly $12 billion in revenue. By the mid-1980s, Target and Walmart started spreading into Kmart suburban turf. In doing so, they called Kmart’s very existence into question: if Target was more fashionable and Walmart was cheaper, what was Kmart? And that became the problem. No one knew why you would go to a Kmart. And Kmart had another problem. While Walmart opened its giant Supercenters and Target created exclusive lines with famous fashion designers, Kmart’s stores fell into disarray. Even as Kmart chief executives took home huge salaries, the stores’ shelves were empty, cash registers were outdated, and carpets were faded. Kmart’s yearly sales fell by nearly 10 billion dollars from 1990 to 2002. It sold all of its other businesses and 200 of its own stores. However, it was still deeply in debt, struggling to keep its shelves full and pay its suppliers on time. They had problems figuring out matching sales to distribution. It sounds like an easy problem, but when you multiply it by thousands of stores with thousands of items, it’s not an easy problem. Kmart bet it all on the 2001 holiday season. To challenge Walmart’s “Always Low Prices,” Kmart’s new CEO Charles Conaway slashed prices on over 50,000 products nationwide. But Kmart’s suppliers couldn’t keep up, and Walmart just slashed their prices even more. After a disappointing finish to the year, Kmart filed for bankruptcy in early 2002. Lenders just didn’t have the confidence at that point to continue to roll over that debt for Kmart. As it went through bankruptcy court, Kmart drew the attention of hedge fund manager Eddie Lampert. He thought the value of the brand’s real estate was worth saving, So he bought Kmart’s debt, bringing Kmart out of bankruptcy by May 2003 as its new chairman. Then, Lampert implemented what he hoped would be his masterstroke: combining Kmart with Sears, the struggling tools and appliances retailer. Lampert was a major Sears shareholder and he hoped that, by merging the strengths of each store, they would have the combined clout to take on Walmart. But this, too, was a disaster for both retailers. Kmart shoppers didn’t want Sears’ tools. Sears shoppers didn’t want Kmart’s homegoods. And both sets of shoppers disliked the deteriorating store interiors. So Kmart’s sales went into freefall, from 16 billion in 2009 to 5.8 billion in 2018. Meanwhile, Walmart’s 2018 U.S. sales swelled to $318 billion and Target stayed strong at $72 billion. Kmart’s parent company, Sears Holdings, filed for bankruptcy in October 2018. So Kmart now finds itself in the same place it was 16 years ago: bankrupt, struggling with debt, and watching its sales shrink. Its chairman, Eddie Lampert, has submitted a bid to buy Sears’ debt, but Kmart’s future is less clear. This time, Kmart really could be…

100 comments on “How Kmart Went From Beating Walmart And Target To Bankruptcy”

  1. Charlie Lentz says:

    Kmart, Kmart
    That's our store
    We shop there
    Because we're poor

  2. Tommy Loika says:

    Target does not support our troops 🇺🇸

  3. TheCarelessGamer says:

    There still an open Kmart near
    me

  4. Zibbe122 says:

    In North Carolina its still exists

  5. Horacio Ruiz says:

    I went to K mart before i saw tons of bugs and there was cracks in the floor and the roof was cheap and i didnt even find the thing i wanted i went to walmart after that

  6. Erick Villarreal says:

    In conclusion
    Target and Walmart were better than K mart

  7. i need a life says:

    I miss my kmart

  8. MEll0 Plays says:

    I work at a Kmart right now 😂

  9. Will Smith That’s hot says:

    ?

  10. Angielina Vang says:

    We have a kmart located in Minnesota

  11. the meme boys says:

    Whats kmart

  12. optimus boi says:

    I miss kmart because it was the first retail store I've ever been

  13. ᴇʟᴇᴠᴇɴ ʜᴏᴘᴘᴇʀ says:

    any Canadians here?
    (no kmart in Canada)

  14. can I get 1000 subscribers without any videos says:

    What's a k mart I'm Jamaican

  15. Mystic Frostgem says:

    R. I. P. Kmart.

  16. Erika Loves says:

    Kmart used to be my favorite place

  17. Dead Rats says:

    I miss going to K-Mart 😔

  18. Johnny Varney says:

    This only scratches the surface of went wrong with Kmart, the reality is that they quit thinking and made changes based on sales alone. The best example is knitting supplies should well but profits were low, they decided to do away with the big selection of knitting supplies, when they did that ole Mom and Pop stopped shopping there. The thing is while knitting supplies weren't big profit items the things pop was buying such as oil, filters , new faucet for the laundry tub, then on to sporting goods and the good profits, lures, fishing rod and reels for the grandkids, maybe a box of shotgun shells mostly high profit items that were no longer being sold. Then they brought in the new, Hip kids fashions, at the same time they layed off most of security, now losses jumped over 10%. In comes chuck Conway and Mark whatever his name was, both who were known for bankrupting businesses. Mark took out a 102 year old hardware chain in New York prior to be hired. They started changing the advertising and slogans every 4- 6 months at huge cost and paid for it with store layoffs and hour reductions, customer service was none existant! Bankruptcy and Eddie taking over- coming out of bankruptcy Kmart was able to screw over employees and vendors to the tune of 1 Billion dollars! That was cash in hand afterwards. Remember this was before Enron and Kmart had kept its Employees 401K in Kmart stock so that was zeroed out. At that point Eddie had planned to disassemble Kmart selling all the prime real estate but that's the point that Commercial real Estate was in its downward turn ( and Kmart owns some very prime corner real estate). Needless to say the only reason Kmart is still here is because the real estate market hasnt fully recovered. It's mostly gone though with Sears to follow. There is of course more mismanagement that led Kmart down the path such as inventory control systems the were obsolete by 6 years before being implemented, inventory out of control of local managers and demands of staffing numbers so low the Garden City ( #4000 ) store had just a store manager, asst manager and 2 employees working during a Friday and Saturday evening.

  19. MaxyZgamez says:

    The Kmart in my town is turning into a Publix green wise except they had to demolish the building and place a bunch of beams into the ground cause the lands not strong enough but that’s Florida for ya

  20. Jar Tech says:

    Kmart sucks

  21. Jacinda Rose says:

    Kmart in Australia is extremely popular but they are not the same

  22. Cookie Monster says:

    I forgot Kmart existed

  23. Dodo Internet says:

    Who else works at kmart?

  24. Jessica aka KEKA Barcinas says:

    I wonder what will happen to Kmart in GUAM if they were to put a Walmart.

  25. Action Packed Gaming says:

    I moved to new jersey and was shocked that I found a k mart store. Decided to check it out and man did it look so outdated. Everything just looked old and it had many empty shelves. It got closed down last year maybe it was for the best

  26. Spartan Patten says:

    So sad. Kmart diapers were so cheap

  27. ItzzSidra says:

    Kmart was my childhood I would go there with my parents since in the store there was a ceasers pizza place 😭😭

  28. HeyItsIssa says:

    Every city in Puerto Rico has a damn K-mart.

  29. xd Angel b. says:

    Does any one had a local 4 for less storeand got replaced by smiths store ????

  30. Jasmin , says:

    The only Kmart in my town burnt down back in 17' kinda tragic

  31. Noah Truitt says:

    I did in North Carolina It looked kinda old

  32. Vet Doc says:

    Forgot Amazon and eBay. Not only Walmart&Target made them go.
    How many times you got to Bestbuy or Walmart look the TV or Tablet or whatever and then buy it 10% lower online?
    I would say 30% of Storewalkers are Onlinebuyer ….

  33. tea and clorox says:

    my Kmart closed down

  34. Milana 123 says:

    Is anyone else like who the fudge is Kmart or am I the only one???😂

  35. Nicole Muse says:

    kmart sells online and ships to sears

  36. Mushroom God says:

    i still have a k mart near me i walk in there because nostalgia

  37. SkRT says:

    The only Kmart near me has had a clearance and a closing sign for the past 5 years

  38. Ava Nicholson says:

    Kmart in Australia is very popular

  39. Starsunbare says:

    Walmart happened to Kmart

  40. Mikayleigh Zancanella says:

    The Kmart where i live got shut down but our sports authority also left my town around the same time. So is sports authority also going out of business?

  41. Someone Random says:

    F it’s gone

  42. TechNewsAUS says:

    Come to Australia, its everywhere

  43. jennifer tran says:

    Tar jay 😭😭😭😭🤦🏻‍♀️

  44. Hi I’m, TREY I HAVE A BASKETBALL GAME TOMORROW says:

    K-mart in Australia is basically where everyone goes to get anything.

  45. Riflera Hunting says:

    So which company’s gonna buy it?

  46. Valia Ryan says:

    Kmart was a great store. Is Kmart can fall then so can Walmart and target, I bet Walmart is next

  47. Ella Ruby says:

    KMART IS THRIVING IN AUSTRALIA 🇦🇺

  48. Tanvir Singh says:

    wow a video with so much story and character it all started with a dream to buy a toaster and it all ends with a toaster 😔

  49. MonteTV says:

    a use to be kmart parking lot has been taken over by amazon for delivery driver's parking

  50. DragonKazooie89 says:

    My mom use to shop a Kmart because it was the only place that sold women's shoes in a size 11 or 12.

  51. Furret Walcc says:

    One kmart still near me

  52. Time Traveler says:

    Walmart is next. Target is already remodeling all stores to fit the modern image and Walmart still feels like I traveled 10yrs back in time. Not to mention the ghetto ppl shop at Walmart and the well off shop at target so ppl who can get what they want off amazon just shop online rather than go to a ghetto filth store

  53. just jazzy says:

    I’m an Aussie and Kmart is soo good

  54. Your name says:

    I have never been to Kmart but there is Hmart and I like going there

  55. SnoFox says:

    My Kmart near me closed and now turned into a ShopRite

    That’s it

  56. Lydia Vang says:

    We still have kmart in Minnesota

  57. Famous Nena says:

    I lowkey miss Kmart tho😩

  58. Marge Pellew says:

    Walmart will be next. Everything is going to online

  59. GhostDanny says:

    My Kmart just closed 😭

  60. Dalia Martinez says:

    My Kmart was closed 2012

  61. No One says:

    There's kmart's in Australia XD

  62. Buvizstore says:

    Save 20% on your next order with coupon code GET20. Limited time only. @buviz

  63. Kleo Leonard says:

    Kmart in Australia is successful

  64. bigmuscleman says:

    Kmart in Australia and New Zealand is still one of the biggest retailers very surprised to how bad they are in the USA.

  65. Melissa says:

    “Attention Kmart shoppers” ahh I’m gonna miss that😭

  66. Miserablette says:

    What’s a Kmart?

  67. Arny Arnoldson says:

    Reminds me of Sears

  68. Jasmin Jaz says:

    Kmart in Australia is like target in usa

  69. LivingFree Naturally says:

    I loved KMart & I miss it💜

  70. 00819813 0013824 says:

    we would always go to kmart in LA .. everyone chose kmart instead of walmart and especially target

  71. Blessed Mommy says:

    There’s still a Kmart by me

  72. khila says:

    I never heard of k mart

  73. The Dapper Donuts says:

    Bruh I live near two K Mart’s and they’re still doing well but it’s super depressing when u go in there. But everything is really expensive for no reason.

  74. That Xbox Channel says:

    Walmart be like From the D to the A put respect on it

  75. Ebing Gallos says:

    This very sad. I luv Kmart, I miss them. I wish they Take-care of it better mess Managesment.

  76. Christine Garcia says:

    There’s a Kmart next to my house still open

  77. Giovanna says:

    They replaced our Big K/ Kmart with a Savemart, Ross, Sprint, and doctors office 💀

  78. Galilea Medina says:

    I still have a Kmart in my town

  79. Phumlani Mlotshwa says:

    I don't even know what Kmart is but I Just clicked it coz it was the first thing in my recommended

  80. mrquizical says:

    Don't forget, Target got hacked their biggest one in 2018 and many hacks before, affecting millions upon millions of customers.  That is why they were a ghost town which seems to have been recovering somewhat in the last year.  They seem to use their red logo more often now, then their name Target, in my opinion

  81. Jackeline 916 says:

    Same with big lots

  82. Sanjitha Morla says:

    In New Zealand and Australia Kmart is very famous it is number 3 on the best shops

  83. Ru Ben says:

    Amazon should buy the empty stores and open up shop of some kind of some sort.

  84. Sharmila Inamdar says:

    Kylie Jenner joined the chat

  85. Elyas Alghaffari says:

    K mart is still in Au

  86. Mark Adams says:

    Its French over-lords are taking Target the same way at K-Mart….  In the end, there will be Walmart and Amazon duking-it-out.

  87. Kimmy Cakes says:

    I miss Kmart

  88. Heisted says:

    I’ve never even heard of Kmart. I’m from Russia.

  89. Izabelle Petrova says:

    ive never heard of a kamart?-

  90. Victoria Larsen says:

    Kmart? It’s so big in Australia and New Zealand! Google Kmart Australia

  91. chriskache says:

    Kmart hired too many uneducated ppl to work in they stores.

  92. Waelotheboss wael says:

    The reason I don’t go to Kmart is because I don’t get any signal there

  93. Liam McKeagg says:

    Kmart in Australia is EXTREMELY GOOD and is thriving!

  94. PABLO ARVELO says:

    What happened to Ames?

  95. Jamie Kloer says:

    Walmart is disgusting I would drive miles before going in Walmart. Something about the place makes me want to puke. I don’t know if it’s the cheap junk or the 100 year old people who have to greet you at door because they have to work. The lighting everything is just degrading.

  96. YungBug says:

    Kmart be popping in Australia

  97. Michael Calafiore says:

    Here in Australia KMart is awesome! It is the store you go to for so much cheap stuff.

  98. adeebah khan says:

    Kmart is still the biggest in new Zealand everyone here goes to Kmart
    Need anything Kmart has your back it's like a slightly cheaper option than warehouse

  99. ICEY DICEY says:

    I never knew Kmart was in America because it’s so big In Australia

  100. Jean Marcks says:

    Kmart Walmart Target all started in 1962! The year I was born!

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